"Left Out Of The Family Estate? - There May Be A Presumption of A resulting trust"

What rights do you have if your elderly parents pass away (whether together or a years apart), and before their passing they 'loaned' money to or added one of your siblings as a joint title holder (joint tenant) of family/matrimonial home? Are you or your other siblings entitled to a share in the house or any money from its sale?

The short answer is, it depends. I will deal below with situations involving both gifts of land and gifts of money.

Gifts of Land or Real Property

A transfer of property, for no consideration between parent and child, raises the legal presumption of a "resulting trust" in favour of the estate of the deceased. The word "consideration' is legal term meaning something the parties 'agree' is given in exchange, however small in value, even if only one dollar.

A resulting trust is a trust based on either the intent of the transferor of the property or a trust obligation imposed by law. In either situation, whether by actual intent or deem so by the law, the property "results" as it goes back to the transferor: D. M. W. Waters, Law of Trusts in Canada (1974) at pp. 17-20; Parkland Mortgage Corporation v. Therevan Development Corporation, 1981 CanLII 1133 (AB QB), para. 5.

To avoid, or rebut this legal presumption of a resulting trust (i.e. when property is transferred between parent and 'child'), the receiving sibling/child must satisfy a Court that the parent(s) put the sibling's name on the property intending it to be a gift to that sibling. In other words, the sibling must show that he or she was not merely considered by the parent(s) as a "responsible hand" to manage the property for the rest of family.

If it was a gift to keep, as opposed to an asset to be managed for the rest of the family, the gift is termed an advancement to the 'child' or sibling.

In Pecore v. Pecore, [2007] 1 S.C.R. 795, 2007 SCC 17 (CanLII), the Supreme Court of Canada defined an "advancement" at paragraph 21 as a gift made during a transferor's lifetime to a financially dependent child or spouse. The child will need to have been a minor at the time of the transfer for the presumption of advancement to exist.

There will of course be situations where a transfer between a parent and an adult child was intended to be a gift. It is then on the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support his or her claim. In such situations, while dependency will not be a basis for the presumption of advancement, evidence as to the degree any of dependency of an adult transferee child will be helpful.: Pecore v. Pecore, para. 41; Sopinka et al., The Law of Evidence in Canada, at p. 116;  

In such circumstances, the parent transferring the property is presumed to have intended to make a gift.

A party challenging a transfer bears the onus of rebutting the presumption of a gift by proving that a gift was not intended. However, where a transfer is made for no consideration, the onus is placed on the transferee (the sibling) to demonstrate that a gift was intended. This is because equity presumes bargains, not gifts.: see Pecore v. Pecore, para. 24; Waters' Law of Trusts, at p. 375, and E.E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. 

So, the resolution to the issue will depend on the above factors, as well as the following: 

- whether the transfer was of a legal title only or a legal and beneficial ownership of the land;

- did the deceased tell friends and other siblings that he wanted all his children to inherit his house, etc. (Kozusko v Kozusko, 2015 ONSC 4625 (CanLII), para. 26);

- whether the property was in fact a joint tenancy, rather than just a tenancy in common.

It is also important to note that a property may have been a joint tenancy, but later severed at common law, say through a course of dealing with the property by which the co-owners conveyed (showed) an intention to treat their ownership as a tenancy in common rather than a joint-tenancy (Williams v. Hensman, [1861], 1 J.N.H. 546, 70 E.R. 862 (V.C.), p. 867). A joint-tenancy may also be severed by alienation or by agreement, as much as by a course of conduct. However, neither a separation of spouses nor a divorce, without more, severs a joint-tenancy.: Dunn Estate v. Dunn, 1994 CanLII 9136 (AB QB), para. 9.

A person who thinks that a joint tenancy has been severed or believes that they have an interest in that property can apply to the court for a "declaration" that they or the deceased's estate is entitled to an interest in the home/property. In addition, they can apply for an order under section 2 of the Ontario Partition Act for the partitioning and sale of the home, including a matrimonial home. (Hansen Estate v. Hansen 2012 ONCA 112 (CanLII), [2012] O.J. No. 780 (ONCA); Chafe v. Hunter et al, 2013 CanLII 55894 (NL SCTD), para. 12; Shafaei v. Vossoughi, 2009 CanLII 38510 (ON SC)).

Gifts of Money

In situations where the gift or transfer was not land but money, the following summarises the factors to be considered in determining whether the monies advanced were a loan or a gift in the family context:

1. whether there were any contemporaneous documents evidencing a loan;
2. whether the manner for repayment is specified;
3. whether there is security held for the loan;
4. whether there are advances to one child and not others, or advances of unequal amounts to various children;
5. whether there has been any demand for payment before the separation of the parties;
6. whether there has been any partial repayment; and
7. whether there was any expectation, or likelihood, of repayment.
[Locke v. Locke, 2000 BCSC 1300 (CanLII), para. 20; cited in Klimm v Klimm 2010 ONSC 1479 (CanLII), [2010] O. J. No. 968; Kim v. Kim, 2014 ONSC 4773 (CanLII), para. 11.]

Where the court deems that the money advanced was a loan rather than a gift, the funds revert by way of a resulting trust to the estate of the transferor.

If you believe that you may have an interest in an estate or the home of a deceased parent or relative, and would like advice or assistance, please contact us at this email address: pm@mooreslawpractice.ca.

NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist (specific) advice should be sought about your specific circumstances.